Beverage coalition seeks compromises to Murphy’s plan to increase liquor licenses

By David Wildstein, April 20 2023 10:48 am

Gov. Phil Murphy’s proposal to make liquor licenses more plentiful and less expensive has caused four influential advocacy groups with tentacles into all 40 legislative districts to form a coalition to help lawmakers understand issues connected to the plan and possibly seek a compromise.

The New Jersey Licensed Beverage Association, the New Jersey Restaurant and Hospitality Association, the New Jersey Wine and Spirits Wholesalers Association, and the Beer Wholesalers Association of New Jersey anchor the Coalition for Responsible Alcohol Licensing.

“We cannot sit idly by while the Governor attempts to reduce our sweat equity and financial investments to nothing more than a scrap of paper to be picked up at town hall,” said NJLBA executive director Diane Weiss.  “We are committed to protecting the value and integrity of NJ liquor license holders.”

Restaurants, bars, and taverns bring in over $12 billion in revenues, with alcohol wholesalers generating another $8 billion, according to former Assemblyman Jeff Warsh, the Wine and Spirits Wholesaler Association executive director.

Murphy has asked the legislature to decrease the cap on the number of licenses for each municipality – right now, it’s one for every 3,000 residents — over the next five years and then eliminates the limit entirely.

Once that happens, liquor license owners would no longer be permitted to sell their licenses privately, diminishing a significant asset for family-owned bars and restaurants.

“The problem we can’t turn away from is those investments were already made, and those liquor licensees did exactly what they were required to do under a system created by the State,” said Dana Lancellotti, the president and CEO of the Restaurant and Hospitality Association.  “The Administration’s plan would immediately diminish the value of these licenses and would financially devastate many small business owners who are continuing to face issues stemming from the pandemic including workforce shortages and supply chain issues.”

Industry leaders complain that the governor’s proposal comes at a bad time, with restaurants, bars, and taverns still recovering from closures during the pandemic.

Instead, the coalition is proposing a compromise that incentivizes the activation and transfer of inactive licenses – about 24% of all licenses, and creating an option where municipalities that have regional shopping malls can switch out licenses to other areas of the community while allowing mall licensees to continue.   State Sens. Paul Sarlo (D-Wood-Ridge) and Joseph Cryan (D-Union) have sponsored legislation to permit this.

But Murphy pushed back on this during a recent meeting with mayors.

“Merely releasing pocket licenses won’t do anything to close down the secondary market that has allowed licenses to reach such atmospheric price tags in the first place,” he said.  “Returning a pocket license to circulation means that the deep-pocketed investor who lost out in the last bidding will try again. And it means the small-business owner will once again be locked out.”

According to former Fair Haven Mayor Michael Halfacre, the Beer Wholesalers Association executive director, there are over 200 inactive licenses in towns represented by mayors who are members of the Governor’s Mayors for Liquor License Reform committee.

“It would be so much more effective to get those existing licenses into business than to further hinder economic development by creating new licenses when they can’t even use the ones they have,” Halfacre said.

The coalition also wants to amend the Smart Groth License option to make “qualifying thresholds more reasonable and attainable.”

Additionally, the groups are seeking a program within the state Economic Development Authority “that targets specific populations to incentivize entrepreneurs to enter the alcoholic beverage marketplace.”

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